Question on Tax

ad1927

My B-I-L has a job where some weeks he earns £700, and others he earns £1000.  However, at this time of year he is not working and ends up earning just £250.
Every year he gets a tax rebate of a few thousand pounds, except last year where he got nothing.  My wife, who helps him with finances, was complaining and she showed me his P60 where the amount he paid in tax was roughly the same as me and he earned, over the 12 months, roughly the same as me.  I pointed out that, based on that, he was paying the correct amount of tax (I have used various take home calculators and I am happy that I am paying the correct amount of tax).

I explained to them both that, if you get a huge payment in October, HMRC assumes you will be earning that money every month and over taxes you before subsequent months see a correction in your taxes.

Anyway, he was not happy, and has just been in contact with the HMRC who have repaid him - for the last 4 years - about £16k.  Good luck to the guy, but that equates to an average of £4k a year and, considering last year's tax looked spot on to me, more like £5,300 for the preceding 3 years.  Bearing in mind that he has previously had tax rebates of £2000 - £4000 in previous years.  

I asked my wife how is this even possible, and she said he has done a "self assessment".  Is it possible that he has converted to being self assessed for taxes and this self-assessment is being back dated and the refund is purely the PAYE tax he has paid for those 4 years with the likelihood that he will be taxed when he completes his previous 4 years?  

Dazed_and_C0nfused

Every year he gets a tax rebate of a few thousand pounds, except last year where he got nothing. 

Do you mean during the tax year in question or after the tax year ends?

I asked my wife how is this even possible, and she said he has done a "self assessment". Is it possible that he has converted to being self assessed for taxes and this self-assessment is being back dated and the refund is purely the PAYE tax he has paid for those 4 years with the likelihood that he will be taxed when he completes his previous 4 years?  

If he has given a reason to need to complete a Self Assessment return then he will be able to complete then back to 2016:17 (4 complete tax years).

Did he do this himself or has he used an accountant/tax advisor?

Is it quite possible it is his PAYE tax yes.

It is also quite possible HMRC will later ask questions and if not satisfied tell him to pay it back.

ad1927

Dazed_and_C0nfused said:

Every year he gets a tax rebate of a few thousand pounds, except last year where he got nothing. 

Do you mean during the tax year in question or after the tax year ends?

I asked my wife how is this even possible, and she said he has done a "self assessment". Is it possible that he has converted to being self assessed for taxes and this self-assessment is being back dated and the refund is purely the PAYE tax he has paid for those 4 years with the likelihood that he will be taxed when he completes his previous 4 years?  

If he has given a reason to need to complete a Self Assessment return then he will be able to complete then back to 2016:17 (4 complete tax years).

Did he do this himself or has he used an accountant/tax advisor?

Is it quite possible it is his PAYE tax yes.

It is also quite possible HMRC will later ask questions and if not satisfied tell him to pay it back.

He has had money back at the end of most tax years.  Each time he has had to complain or file a claim.

This year they were both talking of self-assessment.  The only thing I can think is that this is his PAYE tax for those 4 years.  He had a few periods of not working.  I was wondering if the HMRC pay back the PAYE for the 4 years and wait for the self assessment forms to come in before back-dating their claim for his money?  The way he runs his finances, the money won't be around for much longer.

ad1927

Oh, just to mention in previous years he had a letter saying how much he was overpaid.  Then, this was paid to his account.

This latest repayment came with a letter and a Payable Order attached.  The letter reads "Thank you for your claim for repayment.  Attached is a payable order of £16,xxx.xx"

Grumpy_chap

Although I understand the OP is asking the question because of an apparent inconsistency between the tax paid by the OP and the OP's BiL despite apparently similar annual salaries, all the OP really needs to be concerned with is the tax that the OP needs to pay.  Any one else, even with notionally similar incomes, may have a high number of reasons why the tax liability could be different - variance in pension contributions or company vehicle are perhaps the most obvious examples.

Based on the use of on-line calculators, the OP is satisfied they pay the correct tax and that is all that matters.